France rejects Britain's plan for banks to access EU after Brexit

Reuters Staff

4 Min Read

LONDON (Reuters) - France said that it was not taking a hard line in Brexit talks on Tuesday but that it saw little chance of securing a free trade deal for financial services that would provide the degree of access sought by Britain’s biggest taxpaying sector.

FILE PHOTO: French Finance Minister Bruno Le Maire speaks during a news conference after a National Council of Industry at the Bercy Finance Ministry in Paris, France, February 26, 2018. REUTERS/Benoit Tessier

Banks in Britain can currently trade across the bloc’s single market under European “passporting” rules. But this is expected to end after the United Kingdom ceases to be a European Union member in 2019.

During a visit to London, French Finance Minister Bruno Le Maire said finance companies would have to rely on what is known as equivalence. The legal mechanism allows countries from outside the EU to access the single market in limited circumstances although that access is patchy and can be revoked at short notice.

“Financial services cannot be in a free trade agreement ... We have to rely on equivalence regimes, that is the best solution for financial services,” Le Maire told BBC radio, citing the need for stability and supervision in the sector.

Britain’s government is proposing a mutual recognition system so financial service firms will retain access to the EU on the condition that each side preserve regulatory standards in line with the best international standards. But EU officials say that is not workable.

The stand-off between Britain and the EU over future access to the single market for London’s financial services industry is shaping up to be one of the key Brexit battlegrounds before Britain is due to leave the bloc in March 2019.

NO HARD LINE

Le Maire also rejected suggestions in the British press that France was taking a hard line in Brexit negotiations.

“I read in some papers that France is being the toughest in the current negotiations. This is not correct,” Le Maire said in a later speech at the Chatham House think tank.

“We are not in favour of a hard Brexit nor of a soft Brexit. We are in favour of a fair Brexit, a Brexit which would be in the interest of both the UK and Europe,” he added.

French officials have repeatedly said that Paris’ main objective in Brexit negotiations was to maintain the unity of the 27 remaining countries.

They have also said traditional UK allies such as the Dutch and Danes were of the same view as France because their eurosceptic publics would start asking for the same deal if Britain managed to secure a favorable arrangement.

France potentially stands to gain from any move away from London as Europe’s financial services hub, and is trying to make itself more business-friendly after the election of former investment banker Emmanuel Macron.

“We want France to be as attractive as possible,” Le Maire said.

He added that a post-Brexit trade deal between Britain and the EU should entail as little friction as possible.

“We need to find a new solution for the UK and the EU, and it will be up to Monsieur Barnier to find. The first objective should be as little friction as possible and the lowest possible tariffs,” he said.

In Paris, Le Maire’s foreign ministry counterpart, Jean-Yves Le Drian, offered a different take on Brexit:

“What’s going on in Britain is the gradual realisation that they’ve made a very big mistake,” he told lawmakers in a question and answer session.

Reporting by Elisabeth O'Leary in London and Leigh Thomas and Michel Rose in Paris; Editing by Andy Bruce, Andrew MacAskill and Hugh Lawson